Submission to the National Frameworks for Workers’ Compensation and Occupational Health & Safety.

Background:

Employment Advocacy Solutions Pty Ltd has been set up in response to a perceived demand for low cost effective services for both employers and employees in the areas of industrial relations, OH&S and Workers’ Compensation. The Company is developing services across all States and Territories.

The company principal has been involved either full or part time in these areas for over thirty years. The observations and comments herein are based on observations of the conduct of worker’s’ compensation and OH&S in the NSW Police Service, the public health sector, the NSW timber/forests industry and the national wool industry over that time.

Key issues/comments:

•	Vested interests (Employer bodies, Unions, Insurers and practitioners of law) have all (often inadvertently) created an atmosphere of such complexity across the workers’ compensation and related field of Occupational Health & Safety, that both employers and employees (but especially employers) have abandoned any real pretext at involvement in the delivery of services, claims management or rehabilitation.

•	Small to medium sized enterprises are not equipped or skilled (despite both Employer and Union bodies attempts to provide training and education) in the area of worker’s compensation management. The connection between costs savings/premium savings/worker safety and involvement at a management level has not been established.

•	A mentality of ‘them and us’ has emerged in all jurisdictions because of the often wrong perception by employers that they are the ‘victims’ of government schemes, perceived as being more about creating ‘hollow logs’ from which governments can extract revenues, rather than as true programs aimed at reducing worker’s compensation costs and minimizing worker down time.

•	Employees are being subjected to major reductions in entitlements for legitimate injury and have little encouragement to cooperate in minimizing employer costs

•	Employees who suffer serious injury do not receive (perceived and often actual) benefits that adequately compensate them for their suffering, medical or other related costs. For most employees the consequences of work place injury (minor or serious) are not realized until it is too late (after the event). If more employees knew in advance what their rights were, (or more often were not) there would be significant reluctance to carry out many jobs.

•	Premium setting, risk factors and other premium setting rules are not clearly understood by employers. The incentive to reduce premiums through management is simply not actively encouraged. Most employers believe they are not to blame for rising premiums and spend more time looking for cheaper options or artificially reducing their premium liability rather than working to identify the real cause of increase premium costs – namely, the absence of genuine commitment by many small to medium enterprises to:

(a)	pay the correct premium for classifications relevant to their workplace;

(b)	Instill at every level of management (especially in the minds of the proprietors) a real ethos about work place safety and worker’s compensation management;

(c)	Seek to genuinely involve their employees in work place safety management programs

•	In most jurisdictions the fees paid to insurers, or the premium recovery systems when costs are incurred, are weighted to ensure that the insurer almost always recovers (over time) the real costs from the employer. There is little if any demonstrable evidence that insurer’s care, one way or another about containing the costs of worker’s compensation, beyond their own cost reduction programs aimed at minimizing their administrative costs.

•	Some Unions have seen State based OH&S legislation as an instrument to pursue industrial agendas and in doing so have debased the importance of worker’s compensation and work place safety management. Many employers are so intimidated by the Union’s role (Union organizers almost always know more about the jurisdictions OH&S rules than employers) that they have walked away from their proper function in respect of the safety of their work place.

•	There is no evidence that ‘privatizing’ State or Territory responsibility for workers’ compensation would deliver improvement. Many government departments can compete with the private sector for service delivery and cost containment, if given the opportunity. The provision of workers’ compensation is a social responsibility that should be conducted on behalf of a caring society as a function of government.

•	True improvements will only be achieved by the introduction national ‘industry/sector based worker’s compensation schemes, based on a set of common rules and a genuine commitment to ensuring workers rights and entitlements are protected and are set at a level that business and the community can afford. [The overriding imperative of the private sector, that profit controls all of their activities will not deliver workers compensation management that shows a sense of real commitment and care of the injured worker.]

•	Until employers and governments recognize their legal, moral and social obligation and until that obligation is underpinned by simple, manageable and consistent rules, workers’ compensation will remain a vexed and burgeoning economic issue.

•	In the writer’s opinion fraud is not the real issue (it can be aggressively managed). The real issue is the complexity and duplication of services and the existence of multiple jurisdictions all claming uniqueness solely because of artificial territorial borders. (If these borders can be overcome to provide a national corporate legislative framework, saving governments and businesses millions of dollars in costs, then why can’t it be done in  the area of workers’ compensation and the standardized management of occupational health and safety?)

Comment on Terms of Reference:

….Most States and Territories (States) sic have made a significant number of legislative and operational changes to their programmes that have focused primarily on local conditions (Background Point 3).

The public and industry perception is that most changes have been about reducing employee/worker entitlements in order to protect Insurance Company revenue bases and minimize losses in statutory work cover schemes. Little education about the changes has occurred.

The coverage of employees under workers' compensation and OHS programs appears to have declined due to the composition of the workforce and working arrangements (Point 3 Background).

The writer believes that there is a growing hidden social cost as many employers seriously understate the number and classifications of their employees. Progressively, employees (particularly casuals and those of NESB) are discovering they do not have adequate workers’ compensation protection. 

The issue of ‘nominal defendants’ when employees have not been insured is not well understood. Many employees who suffer injury do not know their rights.

…the HIH Royal Commission is expected to report upon…including workers’ compensation (Point 4-dot point two) 

Little opportunity to address workers’ compensation management and funds management appears to have arisen during this Royal Commission.

Background -Point 5 & 6.

The Community appears to be ahead of government. Recognition of the need for national frameworks is well understood and has been consistently promoted across both employer and employee sectors for some years. The perception is that it is seen as too hard for the national and state parliaments to resolve, and that political needs have priority. From a business perspective the answers appear to be agreed but the solution imposed continues to be ‘let’s have an inquiry”.

Background Point  6 …,while recognizing the differing economic characteristics of the States…….

The real issue is that for most businesses, especially SME’s, the economic characteristics of the States are not relevant. There is little real difference in worker’s compensation terms, in costs/management based on geographical lines. Differences are industry or sector based and should be recognized in national frameworks for the management and delivery of workers’ compensation and OH&S across industry and sectoral regimes. 

The writer sees a potentially important role for the Australian Industrial Relations Commission in the areas under inquiry. It (the AIRC) uses a conciliation process that is consistent and has been adopted in some jurisdictions for workers’ compensation management. Its practitioners (Judges and Commissioner’s) invariably are drawn from the ‘sharp end’ or operating sectors of industry and unions (bringing a level of pragmatism often not seen in more formal legal forums) and there is broad employer support for the AIRCs operations. The role of both legal and para legal practitioners is much more clearly focused on cost effective outcomes and a minimization of ‘legalities’.

The AIRC has a national structure that could cost effectively be expanded to provide easily accessible services, which are well understood by both employers and employees.

Issues under ‘scope of inquiry’.

•	There is no logical reason why consistent definitions of employer, employee, workplace and work related injury/illness and fatalities cannot be adopted across Australia:

•	A consistent benefit structure that recognizes cost/wage variations, much like the existing Australian Award system could quickly be put in place to ensure equity across geographic or work place sectoral groups;

•	Common law access rights should be standardized across the Nation; [Such rights should only be removed where statutory frameworks that include exemplary damages (with a moiety paid to the aggrieved employee) are available;

•	The Corporations power under the Constitution should be the starting point for a national work place injury management standard, with States/Territories legislating or ceding additional powers as required.

•	In the writer’s opinion, the work place culture across Australia, the general reticence by employers to acknowledge employee rights and the reticence in SME’s to look outside the square, preclude the introduction of internal dispute resolution procedures in other than public sector or large entities. The closer the working relationships in a business, the4 less willingness to see dispute resolution or mediation as an acceptable compromise. This is the real power of the conciliation process in the AIRC (an independent umpire with a mission to achieve cost effective results that are (subject to legal rights) binding on the parties. A simple mechanism designed for both side to benefit from is a far better alternative to internal and easily abused or undermined ‘dispute resolution’ processes.

•	Industry based workers’ compensation schemes (similar to the current structure for employer/employee superannuation funds should be actively encouraged, provided that involvement is compulsory for all related businesses.

Col Dorber
Managing Director

Employment Advocacy Solutions Pty Ltd
info@easfy.com.au

ACN104 215 607
Locked Mail Bag 2000
Crows Nest NSW 2065.      Tele: 02 9556 3802   Fax: 02 9439 2157